GM, Bankrupt

Dan Neil, The Los Angeles Times’ Pulitzer Prize-winning car reviewer, says basically all that need be said about GM’s path to bankruptcy in this article, so I encourage you to read it and think on it. My own not-particularly-well-informed opinion on the bankruptcy is that it’s sad it’s come to this, and also very probably the only possible way everyone involved with GM would ever pull their heads out of their collective asses to save the damn company. It seems from the outside like all the stakeholders were adamant there was some way to avoid hitting the bottom without actually having to change any of the things they were doing. If nothing else, that era of magical thinking is over, for GM at least; one hopes such realizations happen in other sectors of American life without the need to smack hard on the bottom like GM has. I’m not tremendously optimistic about this, but we will see.

“In the midst of turning the ship around, GM hit not one but three icebergs: the sudden collapse of the U.S. auto market, the sharp spike in gas prices and the crisis in credit.”

People really, really, really need to understand that those three things are not three different icebergs – they are all outcrops of the same iceberg: the outrageous manipulation of financial and commodity markets by the wealthiest of the wealthy in the face of an energy market that appears to be entering conditions heretofore unknown by global industrial society.

There’s an awful lot going on that led to all this, and an awful lot that we have not seen yet – the 90% of the iceberg that’s still underwater. It’s not going to be fun discovering the rest of it.

Hard to believe it has come to this. Ah well, when you are dealing with organized labour the resolution is always apocalyptic it seems. And GM should have consolidated all its divisions decades ago. When they actually went so far as to produce a Cadillac version of the Chevette, you kinda knew something just wasn’t entirely ‘in ordnung’ over there.

Ah well, when you are dealing with organized labour the resolution is always apocalyptic it seems

Right, because why blame management when there’s a scary “socialist” straw-bogeyman to flail on. But maybe someone can explain to me how labor unions are to blame for bad decisions made by idiots in $1000 suits.

But GM’s collapse is a symptom of a large problem, one that falls on the shoulders of both management and labor – and that is simply this, none of these people accept ownership in the company.

American management nowadays is rarely vested in the company they are running, they swoop in, liquidate a division or two, cash in their options and move on. It matters not whether they’re making cars or creampuffs, it’s all “Product,” and it’s all the same. It’s the MBA mentality. They have no intention of being in any one place for more than a couple of years.

American organized labor is just as bad, they are forever at war with everybody and everything. They see the company they work at as the enemy. The UAW is a perfect example, they’d rather the company go out of business than budge one inch or change one thing. Now, they’ve got no jobs and there aren’t likely to be any, what’s the Union going to do for them now?

The entire management/labor system needs to be overhauled. GM’s collapse is a symptom of a much, much larger disease.

Jim Wright@6
Excellent thoughts, but I want to point out that until management is no longer required by law to maximize profits for shareholders at the expense of everything else, little can change.

It’s hard to assume psychological ownership when you’ll get fired by the shareholders for doing so.

And I’ve been a union worker, and I saw a it as a mostly corrupt system where the union was beholden to the union dues and only answered to the most senior workers. When under pressure, screw the new workers who paid a majority of union dues but votes the least.

Both management and labor saw the company as a cash cow, and neither seemed to want to help the company grow and change in response to new competition and new business models. Probably a small version of the GM situation, yes.

Lack of sustainability = death. Industry needs to move towards sustainable movements. It will take long range planning and nimbleness.

For example, guess what fuel is never going to run out (for all practical purposes)? The sun. We should be plowing much more money into solar power R&D to get to the point more quickly where we can dump fossil fuels. Instead, we still have people debating in this country whether global warming is even happening. GM is just a symptom.

Wow, lots of comments, and everyone want to push some blame around. I agree with lots of these things, but I gotta say, I’m gonna accept a little blame myself.

Why? Because I’m an American, and like most of us, I’ve let myself get gradually deeper into a lifestyle and position which i knew was bad for things but kept at it because it was easier and was working so far. Just like the boys on GM’s board.

I can throw a lot of qualifiers in here, about why I bought that SUV and how useful it’s been and the kind of driving I need to do for work, or about why I chose to have a home 50 miles from work, or why I didn’t invest in PV as soon as I moved to an area which supported it, or the kind of mortgage i have or a thousand other things, but in truth, it’s mostly trying to justify doing the thing that was easier or more comfortable in some way.

Now the GM bankruptcy does not affect me directly. It will have some effect on my life, as has the overall economy. I’m thinking I’ll come out of it in good shape, because I am making and plan to make some sensible adjustments. When it comes down to it, GM probably will too.

I’m also looking at the long view here. We spent roughly two generations getting ourselves to this point. We don’t have to clamor backwards to the starting point right away.

I’m in Canada, we don’t have quite as much money as Americans, so perhaps that’s why “Japanese”* cars have been selling so well, and more recently Korean ones.

I’ve been buying Hondas since roughly 1982 for a very good reason: the only car produced by GM that was of a comparable size was the the Cavalier (or the Pontiac version), and they’re simply not very good in comparison: not the power, not the road-holding, not as well-built, not as durable. Sure, they’ve improved over the years, but they’ve remained 10 (?) years behind for twenty-five years.

GM cars are no less sustainable than those of Ford, Toyota, or Fiat. This is a red herring.

Nor is lack of single payer healthcare the issue. Toyota’s total cost per worker was 20% less, in the US, in recent years.

I haven’t seen a good enough breakdown on where total money went at GM, in terms of suppliers, hourly / production employees, engineering employees, HQ execs, etc. I am however willing to bet they didn’t overpay suppliers, because most of those are broke and bankrupt right now.

This source GM offers buyouts to 74,000 from 16 months ago said hourly production wages were $28 average, with total loaded employee costs of $74/hr including pension and healthcare.

The salary isn’t so huge, but the pension and benefits total exceeds that of IT workers in Silicon Valley on the average.

I don’t know whether to blame the Unions, the Management, the Investors and Bankers and Bondholders who kept paying for this all these years, or what. But the combination of those people made one of the larger losses of capital value in history…

611 million shares outstanding, worth a peak of $90/share plus a bit in the early 90s, so about $50 billion in value vaporized, plus the current cash losses etc. Nice job.

This source GM offers buyouts to 74,000 from 16 months ago said hourly production wages were $28 average, with total loaded employee costs of $74/hr including pension and healthcare.

A story which, I understand, included future (as in projected) pension and wage costs as if they were current liabilities, as well as existing ones. If every company had to account for stuff that way, they’d all be bankrupt. The actual cost is considerably lower, and was included in GM’s figures – their pension plan was actually fairly well capitalized.

(I believe that this is how they’ve manufactured a crisis for Social Security: they load all the future costs onto the present, and claim nothing will change.)

“GM cars are no less sustainable than those of Ford, Toyota, or Fiat. This is a red herring.”

This is not true. A car that reliably lasts 15 or 20 years with reasonable maintenance, like a Toyota or a Honda (especially with a manual transmission), is a far more sustainable item than a “planned obsolescence” American car that is literally falling apart after 6 years because it’s actually designed to do so.

Machinery that lasts 20 years is called “durable goods.” Cars have been treated like disposable commodities for too long.

Disclosure: I was a Chevy man for a long time, but I never bought one new; most of my cars between age 18 and 30 were $500 mid-70’s used Chevys – the rest of them were Hondas. I now own a nicely-restored 1967 Camaro and a 2003 Honda Civic LX which my wife and I bought last year used with 37,000 miles. We expect it to last us a minimum of 15 years and/or 300,000 miles.

I would never, ever buy a new car. I used to work at Edmunds.com and saw the numbers first-hand; buying a new car (even a Japanese car) essentially equals throwing 20-40% of the money you paid for it out the window. That’s compounded horribly by buying it on a 60- or 72-month loan.

Also I’d never buy a GM car that was newer than a 1976 under any circumstances. They’ve been crap since then.

Treating cars like handbags has been a giant mistake and an unconscionable waste of energy and resources. And don’t even get me started on the fact that we burn 50% of our petroleum use just fueling the damn things.

I *love* cars. But they are eating us alive. When I was at Edmunds, I heard about the new Camaro. I love the Camaro, but I knew it was a bad, bad, bad idea for them to make a new one at this point in time.

The cutline of the LA Times article (showing the same photo as at the top here) calls it a ’58 Cadillac Eldorado, but in fact it’s a much more exclusive car: the 1957-58 Eldorado Brougham with air suspension, which cost more than $13,000 new (about twice the price of the standard top-of-the-line Eldorado at the time). That is just an absurd amount of money for that era – I don’t think very many were sold. Manufacturing it was probably one of GM’s worst decisions before the Corvair a year or two later.

My family was all-GM from my parents’ marriage (mid-1950s) until the mid-1970s, at which point the sheer crappiness of the cars’ assembly and design finally drove us away. We all have Subarus now (ours is an Indiana-built Legacy 5-speed). How does anyone expect people to buy GM cars now? There is no way that a long-term reputation for reliability, such as (for example) Subaru has earned, can simply and suddenly be conferred upon GM.

“If mighty GM can fail, cannot also the United States? And the answer is, absolutely.

This is the lesson of GM’s bankruptcy, and it has little to do with market share and miles per gallon. It’s a rebuff of the notion of exceptionalism. Any organization that fails to sufficiently safeguard its means of self-correction and reform, that forsakes long-term investment for short-term gain, that piles up debt year after year, will eventually fail, no matter how grand its history or noble its purpose. If you don’t feel the tingle of national mortality in all this, you’re not paying attention.”

reminds me of a thought that I had recently. I was reading an article in The Economist about France, England, and Germany and about how continental Europe felt vindicated in its market-hostile, big-state outlook by the financial crisis.

The thought was, of course it matters what kind of system you draw your guiding principles from: it matters if you value the stability of a big state over the dynamism of a wide-open marketplace, for example. But it matters a lot more that, whatever system you use, you execute well.

I think that here in America and especially among conservatives, we’ve signed off on the idea that America’s public sector can or should be run well, competently, efficiently. And that’s the cancer that’s killing the system. We get too wrapped up on the particular guiding ideology, as if moving 5% more or less of GDP into the public sector matters more than where our public money is going, and whether it’s doing any good.

Admittedly, ideology is sexy in ways that efficiency isn’t. Making the public sector lean and effective – or even rooting out some of the dysfunction – is like replacing old bridges, modernizing the power grid, and fixing social security. It’s logistics, and it’s too boring to care about, no matter how important it is.

Like GM, we’ve had a pretty good run, and we have plenty to look back on proudly and almost certainly some great things to look forward to (I’d buy a new Camaro if I needed a car, in a heartbeat). But also like GM, we need to take a close look at our business model. Before we contemplate making big changes to the business plan, maybe we should honestly evaluate whether it’s the plan’s fault that we got where we are, or if it’s just that we’ve been doing a reprehensible job of implementing it.

Although I’m basically for government support until GM can be restructured, etc., I find it more than a little disconcerting that I just bought 60% of a car company that promptly went bankrupt.

As for those who suggest GM should just be allowed to go under, if you think so you don’t realize how widespread this ripple effect is going to be now, let alone how vicious it would be if GM and/or Chrysler were to sink totally. As the Michigan governor commented yesterday, even with the bankruptcy when all is said and done, Michigan alone will have lost 1 million jobs.

You’ve got to get past the point of: cars, and realize that when you talk about a company like GM going down, you’re talking it having an affect on dealerships, steel, rubber, paint, plastics, car repair, car parts, glue, the chemical industry, the healthcare industry, the ad agencies, newspapers and magazines and TV (because they get a lot of ad revenue from the car companies), etc. [I know, for instance, that the U of Michigan Health System is considering wage freezes and already done layoffs and were considering more if GM went into bankruptcy. I talked to someone yesterday who works for one of the TV stations and she said she was facing wage cuts because they had lost advertising revenue–and she’s an on-air “personality.”]

It’s really simplistic to just say, “Oh, let them sink, who gives a damn.”

@17 gottacook writes: […] it’s a much more exclusive car: the 1957-58 Eldorado Brougham with air suspension, which cost more than $13,000 new (about twice the price of the standard top-of-the-line Eldorado at the time).

Exclusive — or insane? $13,000 is more than the 1959 purchase price for the brand-new house in which I was raised. Not a luxurious six-bedroom ranch plan, mind you, nor a squalid hovel or tin-roof shack; simply a middle-class suburban family home in a decent neighborhood in southern California.*
IIRC, a truly swank automobile of that era might go for five large, if one were too haughty to haggle. I believe that would even include an Eldorado.†

Something for auto car manufacturers to ponder in future: Yes, making (one of) The Very Finest Automobile(s) in ‘Merkia is well and good, but when said dream car is priced beyond the means of >90% of the consumer market, it’s not what keeps you alive and in business — not even if you flog that market with E-Z credit.

____
* Which, according to Google maps, is still extant. Rather a feat, what with the large amounts of redevelopment on all sides.

† A quick search yielded this link, the text of which seems to confirm my memory.

#6 I have to disagree with several points there. One, a big problem with GM is that their management was mostly homegrown and could never deal with the concept that the “GM Way” might not fly anymore. Two, the UAW of today are not the feather-bedders of the Sixties and Seventies, and sacrificed much over the years to get lay-off proof contracts.

My old man used to be a Ford white-collar man, and he can remember when they almost shut down his operation (a stamping plant in NE Ohio). He cheerfully observed that for about two years after dodging the bullet you never saw people work so hard. I might also note that he didn’t have any great issues with unions per se, seeing as his dad was in the Mine Workers and he had been a steel worker.

Also, whatever else you say about Ford or Chrysler, CEO’s were canned when they didn’t deliver. That never happened at GM.

gottacook @17: “Manufacturing it was probably one of GM’s worst decisions before the Corvair a year or two later.”

Why would you say that?

GM obviously knew that they weren’t going to sell very many. At the time, they had a division that could pretty much hand-build cars with lots of time and little need for economies of scale, and for that kind of money they could afford to use it — that is, after all, why they cost so much. So it’s not at all clear to me that they were losing money or anything else by building these.

Second to that, a large part of the point of cars like this is advertising. That car was specifically designed to be the car that, you, when you were a Hollywood movie star and had Arrived, would buy. And that meant that it helped cement the idea in the American culture that, when you had Arrived, you bought a Cadillac. As a result, many more people, when they felt they had arrived even if less richly, also bought Cadillacs.

(For that matter, it’s not at all clear that the Corvair would have been a bad idea if Nader hadn’t gotten a bee in his bonnet about it.)

It wouldn’t surprise me if GM’s workers shared the same myopic corporate culture that prevented the management from seeing the folly of its ways.

Still, the reason we call those guys in suits “management” is because they’re supposed to manage. One of the bedrock principles of labor relations in the US (as opposed to, say, Germany) is that unions are allowed to negotiate their own wages and working conditions but they aren’t supposed to get involved with deciding the strategic direction of the company, because putting union officials on the board of directors brings us perilously close to socialism.

Well, that’s a knife that cuts both ways. You can’t blame the UAW (of any decade) for demanding the best deal it thought it could get for its constituents. If the mangers on the other side of the table thought the deal was going to drive the company over the cliff then they shouldn’t have signed the contract, because looking after the company’s long-term interests was their job.

Dan Neil is high. It doesn’t matter which candidate GM might or might not have backed — management would never gain sufficient approval from the UAW for non-contract participant political support that the union would allow for any concessions.

The era of magical thinking is not yet over, and will not be over until every party with interests in GM — management, creditors, dealers, unions, local and (now) federal government — understands that the company must stand or fall on the strength of the product alone. That means producing cars people want to buy, at prices that make them affordable. Until every outside source of money not tied to that circumstance is closed off, no truly effective change will be made.

Unfortunately for all of us, the government can reach very deeply into all our pockets to prevent that situation from happening — and now, it has a 60% stake in the company which will “justify” doing so.

I grew up in Windsor. My family (including myself for two summers) were Ford workers, and it was the wages that Ford’s paid my dad that enabled him to put me through law school.

The problem with the North American auto industry, especially that part of the industry situated around Detroit, is that they never seemed to twig to the idea that we did not have to buy their cars. There is this notion that if you are North American, you should buy a North American; anything less would be unpatriotic. To this day when I go home to visit my mother, I see lots of bumper stickers saying “out of a job; keep buying foreign”. My response is always that I will stop buying foreign when you start making cars that I want to buy.

My current car: A 2002 Toyota Rav4. I bought a Toyota because my last Ford (a 1996 escort) broke down on me about one year before I planned. Being in business school at the time, I calculated the cost of this early break down: about $5000.00. I was not going to buy another Ford as I figured that Ford had cost me an extra, unplanned $5000.00.

My current Rav4 runs fine. It is 7 years old and has more than 200K kms. I have never had a problem with any engine/drivetrain components. The only problems I have had have been in non-critical areas, and I could have chosen not to repair them.

To all the Ford, GM and Chrysler workers (and all their managers and execs) out there, I say: I don’t owe you a job. If you want me to buy one of your cars, make a car that I want and make it so that it will last.

Cheers
Andrew

P.S. remember when I said that I drive a Toyota. My sister (also the daughter of a Ford’s worker) has always driven Honda. Over 20 years of Honda ownership, she has owned precisely three of them. Each of them have given her more than 200K Kms of driving.

1. Saturn SW2 from 97 – Sum total of non-crash major repairs over its lifetime is water pump, engine sensor, and alternator. First crash was head-on deer impact, required new hood and bumper and radiator and front crossbeam structure. Second crash was T-bone impact on city street, required new door and quarter panel (repair in progress). 162,000 miles.

2. Ford V6 Mustang from 98 – Sum total of major repairs over its lifetime is new alternator, rear axle bearing, pending fuel line issue due to non-dealer mechanic fucking with the fuel filter, and two driver seat power adjustment / seat track units. 174,000 miles.

3. Subaru Outback from 98 – Sun total of non-crash major repairs over its lifetime is that the engine block disintegrated internally last year, and a replacement engine costs $4,200 plus labor to install (parked, will likely be sold for parts). 150-something thousand miles.

We’ve previously had:

My wife’s old 86 Mustang convertible, which required a new alternator a couple of times and major crash repair (T-boned a Toyota making an illegal left turn with no warning) up through about 175,000 miles, at which point its transmission blew up and repairs cost more than the car’s replacement value and we donated it.

My old VW Dasher Diesel, early 80s (can’t recall what model), hand-me-down from late grandfather, engine lasted to 74,000 miles and then suffered catastrophic cracks in cylinder walls at which point we scrapped it. This particular engine model, used only in the Dasher and not the contemporary diesel Rabbit, had known structural problems by that time, with fleet failure rates that approached unity around 85,000 miles. I don’t hold that against VW – family members with other models (both gas and diesel) had no such problems and generally drove the cars past 250,000 miles. Nobody’s perfect – the cars were fine, that particular engine wasn’t.

My opinion? If your car is falling apart in 6 years, it’s because you forgot to change the oil ever, or you drive it in the snow / salt without ever rinsing it off. My US made cars are lasting just fine.

Used car lifetimes in California are surely increasing in general – cars from the 80s are often still running out here, based on used car ad age distributions. I’m not sure I’d buy any 70s or early 80s US cars, but my experiences with late 80s US cars were adequate, and my US-made 90s cars are doing just fine other than collisions.

@22 Brooks Moses scrobe thusly:GM obviously knew that they weren’t going to sell very many. At the time, they had a division that could pretty much hand-build cars with lots of time and little need for economies of scale, and for that kind of money they could afford to use it — that is, after all, why they cost so much. So it’s not at all clear to me that they were losing money or anything else by building these.

What seems unfortunate is that GM failed to recognize that what they could afford then (at a loss) was not a sound strategy for remaining solvent now.

Second to that, a large part of the point of cars like this is advertising. That car was specifically designed to be the car that, you, when you were a Hollywood movie star and had Arrived, would buy. And that meant that it helped cement the idea in the American culture that, when you had Arrived, you bought a Cadillac. As a result, many more people, when they felt they had arrived even if less richly, also bought Cadillacs.

And GM thereby largely ignored the market majority: people with wealth or income below the top tier (arbitrarily divided at 1-(1/e) on any rational scale you care to choose). Here’s a dirty little secret: Roughly two-thirds of your potential customers have not Arrived; they simply want or need a product which gives a good return on their investment — in this case, an affordable automobile. (Especially in lean times when the notion “I’ve arrived!” meets the reality of reduced income and loan payments to be made.)

Well, hopefully this drama with GM and economy in general will lead to american businesses growing to “maturity” in planning and risk analysis. This could have been, and was actually, predicted way earlier. Arrogance is the name of all evil!!!

The problem with the North American auto industry, especially that part of the industry situated around Detroit, is that they never seemed to twig to the idea that we did not have to buy their cars.

Interesting tidbit about US car manufacturing that I learned while at Edmunds.com, which shocked me to the core:

US cars have been manufactured on a “production” basis, rather than on a “market demand” basis, since right after WW2.

I.E., they would design a car, take a guess at how many they could sell, and then build that many – as opposed to how just about everything else is made and sold, which is by studying the market to see what it needs and really wants, getting pretty solid numbers on possible sales, and hedging manufacture to those numbers, with contingency plans to up production if there’s more demand or kill it if there’s less.

This is why Nintendo Wiis were so hard to get for so long. They were conservative with their marketing sales estimates, so as to mitigate loss in case it didn’t fly, so the production line could only crank out a certain amount. The Wii did fly and they’ve added production, and now there’s plenty to satisfy demand.

The auto industry has said, “we’re going to build 200,000 of this car, and hand them off to the dealers to sell” since the ’40s. This is why you get the Aztek debacle; they committed to producing something like 100,000 of them per year for 3 years, sank the money into tooling the production line, and cranked ‘em out. It was an unappealing vehicle (at least, on the outside – the interior and features were actually pretty decent in many ways), and they sold very few of them.

They did the same thing with huge SUVs, which worked for a few years because of demand, but they were still cranking out tens of thousands of them after the demand literally disappeared almost overnight – I hear there are vast parking lots out in the boonies and various cargo ships and barges full of unsold Tahoe-type trucksters out there.

It worked between 1945 and 1965 when everyone was buying cars (and houses and TVs and all the other American Dream/GI Bill stuff), but that kind of process is lethal in a saturated, competitive market.

They’re dying because they didn’t evolve – literally dinosaurs.

Mr. Herbert #26:

As the saying goes, “your mileage may vary.” Not everyone is as diligent with maintenance as you or I, and everyone’s driving style is different. I’ve seen a lot of cars in the Northeast (used to live in Maine) rusting out from poor washing habits, some in as few as 3 years. A lot of cars are getting beaten to hell by the often-poor conditions of our roads and highways, just getting shaken so hard on bumps and potholes that all the screws, bolts and body connectors vibrate loose.

My personal experience is that most American cars built between 1976 and 2000 are of poorer material/build quality and reliability than foreign cars, and the historical numbers agree.

I’m certainly not saying that an American car can’t be made to last – mine is 42 years old now and in excellent shape – but it takes more effort than maintaining a Toyota.

Apart from that, there’s the “handbag” effect I referred to above. Clearly you’re not the kind of person who “buys” a brand-new car every two years in order to maintain “current fashion.” However, I live in a city full of such people, and it’s pretty disgusting to me.

I think the average person should keep and care for a car for at least 10 years, which would be a far more sustainable use of resources… but of course it would be hard to make insane capitalist ever-increasing legally-mandate profit for your shareholders if you’re a car company under that circumstance.

Well, I don’t want to waste any more words on the 1957-58 Eldorado Brougham – but GM’s dominance of the US market in the 1950s and ’60s did mean that people were sold cars that were hideously space-inefficient (the ’66 Pontiac Bonneville convertible I used to own had not much rear leg room but was 222 inches long with a 124-inch wheelbase) – a result of the fact that GM could make more of a profit per car with larger cars. Hence GM’s various efforts to build a competitive small car were indifferently engineered and, in the case of the first-generation Corvair, downright deadly (the rear swing-axle design defect was corrected for the much prettier 1965-69 cars, but by then the damage to the Corvair name was done). [See J. Patrick Wright’s excellent On a Clear Day You Can See General Motors from the late 1970s (which is written in first person apparently by John Z. DeLorean but is “by” Wright, as explained in the book). Lots of excellent detail about the ossified nature of GM management, the reasons behind the awfulness of the Chevy Vega, etc.]

gottacook @ 17: much more exclusive car: the 1957-58 Eldorado Brougham with air suspension

Brooks Moses @ 22: Second to that, a large part of the point of cars like this is advertising.

Luxury cars are also test beds. Air bags, ABS brakes, fuel injection, advanced gearboxes and transmissions, self-levelling suspension, onboard computers – all of this started out on the most expensive models and trickled down gradually towards the base models.

Some solutions are dead ends – air suspension possibly counts as one. It’s better to find out what works after producing a few thousand Cadillacs than after a million Chevys.

Roy G. Ovrebo @32: I can’t let this go unaddressed – Sure, what you say is true for automakers generally, but in the case of GM and airbags, you should have the facts. From the NY Times, 22 July 1989: “Auto makers initially resisted efforts to legislate air bags, arguing that their effectiveness had not been proved and that customers were not willing to pay for them. That assertion appeared to be borne out when G.M. first brought out air bags as options in the 1974-76 model years; it sold only 10,000 cars with the devices, out of a potential 100,000.” The background: GM offered dashboard airbags as optional equipment on the larger of the two full-size rear-drive platforms (C-body cars) – the Cadillac DeVille, Olds Ninety-Eight, and Buick Electra. The option was withdrawn in the switch to the “downsized” 1977 large cars. If GM actually had gotten behind airbags then, instead of offering them in the most cynical manner possible (i.e., withdrawing them after they didn’t sell well – not surprising given that they were an expensive, non-publicized option), how many lives might have been saved?

Did Gm deserve the bailout? You Ask me I would say NO.. why? When Honda and Toyota were out inventing new cars, GM was busy boasting about its pride and Showing off its hungry hungry Daughter the Hummer